Chapter 4: Managing Your Money
Assignment #4 – Unit 4D
Loan Payments, Credit Cards, and Mortgages
Pages 269 - 283
1. Suppose you pay only the interest on a loan. Will the loan ever be paid off? Why not?
2. What is an installment loan? Explain the meaning and use of the loan payment formula.
3. Explain, in general terms, how the portions of loan payments going to principal and interest change over the life of the loan.
4. Suppose that you need a loan of $10,000 and are offered a choice of a 3-year loan at 7% interest or a 5-year loan at 8% interest. Discuss the pros and cons of each choice.
5. How do credit card loans differ from ordinary installment loans? Why are credit card loans particularly dangerous?
6. What is a mortgage? What is a down payment on a mortgage? Explain how closing costs, including points, can affect loan decisions.
Exercises in your textbook: Pages 285 – 287 Problems 17 - 58